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Food Prices Climb Further At Grocery Stores

By Matt Andrejczak Shoppers paid 4% more for a basket of 16 food items at the supermarket in May compared to February, the American Farm Bureau Federation said Thursday in its latest informal survey. The total average cost of 16 items used to prepare one or more meals was $51.17, up $2.10 from the previous survey, with sirlion tip roast, russet potatoes, sliced deli ham and bacon increasing the most in price. Whole milk was up 16 cents to $3.62 a gallon, while toasted oat cereal cost was up 12 cents to $3.17 for a nine-ounce box, the American Farm Bureau said in its quarterly poll based on 72 shoppers in 30 U.S. states. Just two of the 16 items surveyed dropped in price: Boneless chicken breasts fell 23 cents to $3.09 a pound. Shredded cheese dropped 7 cents to $4.56 a pound. U.S. food companies, including Kraft Foods Inc. (KFT), Kellogg Co. (K) and Sara Lee Corp. (SLE), have been raising prices to combat a sustained surge in costs to buy corn, coffee, oats and other staple food ingredients to consumers. Skyrocketing fuel costs are a recent challenge, fattening the bill food makers pay for freight and storage. On Thursday, J.M. Smucker Co. (SJM), maker of Folgers coffee and Hungry Jack pancake mix, said its cost of products sold will jump 25% over the next 12 months. "Further retail price increases are likely to be the new normal as we move through 2011, especially for meats," American Farm Bureau economist John Anderson said in a statement. Based on first-quarter reports, Kraft appeared to be the only major food company that was able to raise its prices enough to cover its commodities tab. -Matt Andrejczak; 415-439-6400; AskNewswires@dowjones.com